Today we are going to talk about the appli­ca­tions of cog­ni­tive neu­ro­science to trad­ing and neu­ro­fi­nance. Brett N. Steen­barger , Ph.D. is Asso­ciate Pro­fes­sor of Psy­chi­a­try and Behav­ioral Sci­ences at SUNY Upstate Med­ical Uni­ver­sity, active trader for over 30 years, for­mer Direc­tor of Trader Devel­op­ment for Kingstree Trad­ing, LLC, and author of The Psy­chol­ogy of Trad­ing: Tools and Tech­niques for Mind­ing the Mar­kets(Wiley, 2003) and the new Enhanc­ing Trader Per­for­mance: Proven Strate­gies From the Cut­ting Edge of Trad­ing Psy­chol­ogy (Wiley, 2007).

He writes fea­ture columns for the Trad­ing Mar­kets web­site and sev­eral trad­ing pub­li­ca­tions, includ­ing Stocks Futures and Options Magazine.

Key take-aways

–Elite per­form­ers in any highly-competitive field fol­low struc­tured learn­ing and train­ing processes to develop their skills, ensur­ing con­tin­u­ous feed­back and refinement.

- Traders would ben­e­fit to fol­low­ing this exam­ple. Tools at their dis­posal include books, sim­u­la­tion pro­grams, biofeed­back pro­grams for emo­tional man­age­ment, and coaches.

- Spe­cific skills to train are brain speed and work­ing mem­ory (for short-term traders), ana­lyt­i­cal skills (long-term ones). For both, man­ag­ing emotional-driven impul­sive behavior.

Books on Trad­ing and Peak Performance

Alvaro Fer­nan­dez (Alvaro): Wel­come, Prof. Steen­barger. Why don’t you start by pro­vid­ing us some con­text on your inter­est in trad­ing per­for­mance and how it led you to your new book? Read the rest of this entry »

Q: Is “pla­centa brain” real? I am 6 months preg­nant and can’t remem­ber any­thing ever since I got pregnant!

A: Yes, in the third trimester.
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Q: How can I improve my mem­ory? Is there a daily exer­cise I can do to improve it?

A: The most impor­tant com­po­nent of mem­ory is atten­tion. By choos­ing to attend to some­thing and focus on it, you cre­ate a per­sonal inter­ac­tion with it, which gives it per­sonal mean­ing, mak­ing it eas­ier to remem­ber.
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Ques­tion: I enjoyed your last post on good stress vs. bad stress.  I’m a mother of 2, with a career. Are there any quick ways to reduce stress?

Brain Coach: First of all, con­grats on man­ag­ing two full time jobs — moth­er­hood and a career! While the time man­age­ment can be stress­ful, it is essen­tial that you find a moment to just catch your breath from time to time. Even just 10 min­utes a day should help.

The Cen­ter for Mind­ful­ness in Med­i­cine, Health Care, and Soci­ety at the Uni­ver­sity of Mass­a­chu­setts Med­ical School suggests:

Mind­ful­ness is a way of learn­ing to relate directly to what­ever is hap­pen­ing in your life, a way of tak­ing charge of your life, a way of doing some­thing for your­self that no one else can do for you  con­sciously and sys­tem­at­i­cally work­ing with your own stress, pain, ill­ness, and the chal­lenges and demands of every­day life.

In con­trast, you’ve prob­a­bly encoun­tered moments of “mind­less­ness” a loss of aware­ness result­ing in for­get­ful­ness, sep­a­ra­tion from self, and a sense of liv­ing mechan­i­cally. Restor­ing within your­self a bal­anced sense of health and well being requires increased aware­ness of all aspects of self, includ­ing body and mind, heart and soul. Mindfulness-based stress reduc­tion is intended to ignite this inner capac­ity and infuse your life with awareness.

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Short answer … yes! Read the rest of this entry »

Q: I do cross­word puz­zles and sudoku reg­u­larly. Why would I need brain fit­ness, isn’t what I’m already doing enough?

A: Great! What you’re doing is fun and can’t hurt. But nor is it com­plete. Recent rec­om­men­da­tions made by a panel of experts review­ing a poll by the Amer­i­can Soci­ety on Aging stated: “A sin­gle activ­ity, no mat­ter how chal­leng­ing, is not suf­fi­cient to sus­tain the kind of men­tal acu­ity that vir­tu­ally every­one can achieve.”

Using your brain to solve cre­ative chal­lenges is excel­lent prac­tice and will help slow down the effects of aging. The lim­i­ta­tion with your cur­rent brain work­out pro­gram is that it does not have enough vari­ety or nov­elty to work out all your men­tal mus­cles. Have you ever seen the guys in the gym with the buff upper bod­ies sup­ported by lit­tle chicken legs? The same thing can hap­pen in your brain. Just as you crosstrain in your phys­i­cal fit­ness rou­tine (mix­ing car­dio with strength train­ing and flex­i­bil­ity) to get a bal­anced work­out, you need to crosstrain your men­tal fit­ness to exer­cise your brain through motor coor­di­na­tion, emo­tional under­stand­ing, mem­ory, focus and atten­tion, sen­sory com­mu­ni­ca­tion, lan­guage skills, and men­tal visualization.

Fur­ther­more, how can you gauge your improve­ment if you don’t have a way to mea­sure it? Using com­puter soft­ware to give you a base­line score, work out, and fol­low up test gives you a mea­sure of your improve­ment. So basi­cally, right now you are doing a highly focused work­out using lan­guage and mem­ory but with incon­sis­tent chal­lenge and lim­ited feed­back. A struc­tured pro­gram should give you assess­ment, nov­elty, and performance-based chal­lenge while (hope­fully!) being fun. That men­tal stim­u­la­tion can dra­mat­i­cally increase the rate of neu­ro­ge­n­e­sis, or the cre­ation of new neu­rons and the con­nec­tions between neurons.

A recent ran­dom­ized con­trolled double-blind study just pub­lished in August “demon­strates that inten­sive, plasticity-engaging train­ing can result in an enhance­ment of cog­ni­tive func­tion in nor­mal mature adults.” As shown in past stud­ies, enhance­ment of cog­ni­tive func­tion leads to learn­ing or neu­ro­ge­n­e­sis. So keep doing cross­words and sudoku, espe­cially if you enjoy them, but don’t neglect the rest of your brain!

Your ques­tions and com­ments are welcome!